MSPA3 Companhia Melhoramentos de São Paulo

Companhia Melhoramentos de São Paulo, traded on B3 under the tickers MSPA3 and MSPA4, is one of the country’s most traditional companies, with roots in the 19th century. Its history goes back to 1877, when Colonel Antônio Proost Rodovalho began producing lime on his farm on the banks of the Juqueri-Guaçu River, in a region that would come to be known as Caieiras. A few years later, in 1890, Companhia Melhoramentos de São Paulo was formally incorporated, initially linked to paper manufacturing and urban infrastructure in São Paulo, in a context of rapid economic expansion in the state capital. Over the following decades, the company diversified its operations, integrating paper production, publishing activities, and its own energy and transport infrastructure to support its industrial base in Caieiras.

From early on, the company combined industrial production and publishing activities. At the turn of the 20th century, it began supplying paper to the printing house and publisher Bühnaeds & Cia., where brothers Otto and Alfried Weiszflog worked, who would later become central figures in the company’s history. In 1915, the publisher associated with the group released “O Patinho Feio” (“The Ugly Duckling”), considered the first children’s book printed in Brazil, signaling a more structured entry into the publishing market. In 1920, a corporate integration took place between Weiszflog Irmãos and Melhoramentos, consolidating a conglomerate that combined a forestry base, paper production, and publishing activity. In the 1920s, the company expanded its paper production capacity and broadened its book catalog, strengthening its presence both in the paper and literary content value chains.

Throughout the 20th century, Companhia Melhoramentos de São Paulo deepened its focus on planted forests and pulp. In 1942, it incorporated Fazenda Levantina, in Camanducaia (MG), launching there the production of the first Brazilian pulp. In 1946, it achieved pulp production from eucalyptus in Caieiras, a significant technical milestone for the sector. Since the 1920s, the company had already been carrying out large-scale renewable eucalyptus planting, a practice that intensified over time and gave rise to the current high-yield fiber operation. In 1982, it innovated by starting production of CTMP-type pulp from eucalyptus, a technology that enabled the development of specific applications, such as toilet paper made from this raw material.

In its current structure, Companhia Melhoramentos de São Paulo functions predominantly as a holding company for non-financial institutions, focused on equity stakes in other companies and managing its real estate assets. The group organizes its operations into three main fronts, classified as high-yield fibers, publishing, and real estate segments. In 2024, according to the consolidated financial statements, the high-yield fibers segment accounted for approximately 85% of net operating revenue, while publishing represented around 14% and real estate 1%. The company manages three farms – in Caieiras and Bragança Paulista, in the state of São Paulo, and in Camanducaia, in Minas Gerais – in addition to its headquarters in the city of São Paulo, which is also used for leasing corporate spaces, an auditorium, and event areas.

The group’s forestry and industrial arm is concentrated in subsidiary Melhoramentos Florestal Ltda., responsible for silviculture, afforestation and reforestation activities, as well as the production of high-yield fibers from reforested wood, especially pine and eucalyptus. The production process involves wood defibration, and the company also provides management services for silvicultural operations in both its own and third-party reforestation areas. The fibers produced are sold to industrial clients and distributed through direct sales with road logistics. Melhoramentos Florestal is estimated to hold a market share of around 32% in its high-yield fiber market, in a context of favorable international pulp prices, although with greater local competition since the entry of a new competitor in 2018. This revenue concentration is also reflected in the customer base, as three buyers account for around 93% of this subsidiary’s revenue.

The publishing segment is carried out by a group of subsidiaries, including Editora Melhoramentos Ltda., Melhoramentos Livros Ltda., Cora Livros Ltda., Jaguari Livros Ltda., Melhoramentos Livrarias Ltda., Melhoramentos Melius Ltda., Melhoramentos Manguinhos Ltda., and Terras Bonsucesso Ltda. These companies operate in editing, layout, text and illustration production, as well as in publishing and marketing books, literary content, and educational and cultural materials in various formats. Distribution is handled through outsourced logistics, distributors, and sales representatives. Editora Melhoramentos, specifically, estimates a market share of about 1% in a highly fragmented market affected by the crisis in the book retail sector and by competition from other forms of entertainment, such as streaming and gaming. In 2024, the publishing segment accounted for approximately 14% of consolidated operating revenue, also supported by a concentrated customer base, in which three buyers represent 44% of the publishing subsidiary’s revenue.

A third pillar of the conglomerate is related to real estate development and exploitation. Several subsidiaries, such as Altea Empreendimentos Ltda., PLD Cajamar V Empreendimentos Imobiliários S.A., Engelote Incorporações e Urbanismo S.A., and Setor K Empreendimento Imobiliário SPE Ltda., focus on the purchase and sale of properties, land subdivision, real estate development and construction, and the management and leasing of owned assets, with an emphasis on properties geared toward logistics use. There is also a Silent Partnership (Sociedade em Conta de Participação) with Swiss Park Caieiras Incorporadora SPE Ltda., formed in 2018, for the development of a real estate subdivision on company-owned land in Caieiras (SP). Although the real estate segment represents a small share of net operating revenue – about 1% in 2024 – it is directly related to the monetization of the portfolio of land and industrial assets historically accumulated by the company.

Companhia Melhoramentos de São Paulo and its subsidiaries operate predominantly in the domestic market and do not generate material revenue abroad, and are therefore not subject to international market regulations. From the domestic regulatory standpoint, the main exposure is concentrated in Melhoramentos Florestal, which depends on environmental and sanitary licenses for its operations. The agencies involved include the Instituto Estadual de Florestas (IEF) and the Minas Gerais State Department of Environment (SUPRAM) for licensing and forest certification, as well as ANVISA for the production of molded pulp packaging. In dealing with suppliers, power sector regulation stands out, as it is a public service subject to ANEEL rules, and the control of “paper imune” (tax-exempt paper) applied to publishing operations, regulated by SEFAZ/SP and the Federal Revenue Service.

In environmental, social, and governance (ESG) terms, the company maintains a formal structure of policies and reporting. It publishes an annual sustainability report based on GRI and SASB standards, and since fiscal year 2022 its carbon emissions inventory has been audited by an independent firm. In 2023, it prepared its ESG materiality matrix and considers several UN Sustainable Development Goals as priorities for its business, including themes related to education, water, clean energy, decent work, innovation, responsible consumption, climate, and life on land. Subsidiary Melhoramentos Florestal holds 100% FSC pure certification and follows a Forest Development Policy that emphasizes sustainable management, ecosystem protection, water resource conservation, and compliance with environmental and labor laws in São Paulo and Minas Gerais. The company also maintains a Supplier Socio-environmental Responsibility Code and reflects sustainability and ethics aspects in its Code of Conduct, reinforcing corporate governance guidelines applicable across the conglomerate.

MSPA3 and MSPA4 shares therefore represent an interest in a corporate group whose operations are concentrated in high-yield fibers for industry, supported by a certified forestry base, complemented by a book publishing and educational content business and a portfolio of real estate assets focused on logistics use and urban development. This combination of segments, with a strong weighting of the forestry-industrial business, is influenced by factors such as pulp price dynamics, concentration of industrial clients, the competitive environment in the Brazilian publishing market, and the economic monetization of a real estate portfolio historically built in strategic areas of São Paulo and Minas Gerais.